• 1. A new 'developer carveout'

  The Amendment Act introduces a new ‘developer’ definition. A ‘developer’ is a person who enters into one or more contracts for or arranges for domestic building work to be carried out for the erection or construction of 2 or more homes on one or more building sites, and each of which is intended for sale or is the subject of an executed contract of sale. The definition extends to an owner of land in the same circumstances. 

  Part 3A will create a ‘carveout’ such that only select provisions of the DBC Act will apply to contracts between developers and builders. While the DBC Act will continue to require certain minimum terms in contracts between developers and builders, imply statutory warranties into contracts, mandate registered domestic builders carry out work, and prohibit contracting out of the Act, the bulk of the DBC Act will no longer apply to these contracts. 
  
  This will provide greater contracting freedom between developers and builders, recognising these commercial parties do not require the same restrictive protections as owners who contract with builders to build their home. 

Builder and Building Owner Amendments 

• 2. Anti-avoidance provision under section 3(2)

  Section 3(2) of the DBC Act is an anti-avoidance provision intending to prevent aggregation of smaller domestic building contracts designed to avoid the monetary thresholds for major domestic building contracts (MDBC) and the additional legislative requirements that these contracts attract. 

  The amendment clarifies that if multiple domestic building contracts could be the subject of a single contract, and if they were the subject of a single contract would be a MDBC, then the contracts are taken to be a single contract for the purposes of the DBC Act.  

• 3. New work exclusion

  The amendments now confirm that the following is not considered domestic building work to which the DBC Act applies: 

  • the preparation of plans or specifications; and
  • the preparation of a bill of quantities. 
• 4. Further restrictions concerning cost escalation clauses

  Amendments to section 15 will (among other things): 

  • clarify that a builder can only enter into a domestic building contract that contains a cost escalation clause if the contract price is more than $1 million (previously $500,000) or any higher amount as fixed by regulations;
  • make it an offence for a builder to rely on any cost escalation clauses to increase the total contract price by more than 5% or any percentage as fixed by regulations; and
  • disentitle a builder from recovering any money under a cost escalation clause that does not comply with the requirements. 
• 5. A building owner can still withdraw from a MBDC within 5 business days even if independent legal advice has been received

  Prior to the amendment, a building owner could not withdraw from a MDBC during the 5-day ‘cooling off period’ if they had received independent legal advice in respect of the MDBC. This restriction will be removed. 

• 6. Single variation process

  The DBC Act will provide a single variation process for variations to plans and specifications. There will no longer be a distinction between variations by a builder and variations by a building owner. 

• 7. Progress payment stages and limits for specified MDBCs

  The Amendment Act will create new limits on progress payments which will depend on whether a portion of the MDBC incorporates a modern method of construction. Progress payment stages and limits on progress payments will be fixed by regulations. 

  New laws will be introduced in separate legislation which address modern methods of construction.

• 8. Termination of a MDBC by a building owner simplified

  Under the new section 41, it will no longer matter whether an increase in time or contract price was reasonably foreseeable by a builder before an owner can terminate a contract. If the contract price increased by 15% or more, or the contract has not been completed within 1.5 times of the period it was meant to be completed, the building owner will be able to terminate the contract. 

• 9. Expanded circumstances for dispute resolution order and what orders can be made

  Amendments will address common circumstances where a dispute resolution order may be appropriate but are not currently covered by the matters listed in section 49(1)(c). The expanded circumstances now include: 

  • damage allegedly caused in the carrying out of domestic building work or by any defective domestic building work;
  • an alleged failure to pay money under a domestic building contract; and
  • an alleged request for, or the retention of, an amount of money which is not due and payable under a domestic building contract.

  A resolution order will be able to require an owner to pay an amount of money to the builder in relation to a claim or entitlement arising under the domestic building contract, and also require a builder to refund money where the builder accepted payment of an amount without first obtaining the required insurance, and where there have been significant delays in the commencement or completion of the domestic building work under the contract.

• 10. New grounds for a certificate of conciliation to be issued

  Circumstances where a certificate of conciliation can be issued to enable parties to make an application to VCAT will be expanded to include: 

  • when the record of agreement ceases to have effect due to a party providing notice of a failure to comply with a conciliated agreement; and
  • if the chief dispute resolution officer is satisfied there has been non-compliance with a dispute resolution order. 
• 11. Transfer of functions from Director of Consumer Affairs Victoria to the Building and Plumbing Commission

  This change is to align with the establishment of the Building and Plumbing Commission as the single agency to administer domestic building insurance and domestic building disputes.